Development finance is specialist funding for property development projects including new builds, conversions, and major refurbishments.
How It Works
Development Finance is an important concept in the UK financial services landscape. Understanding how it works is essential for brokers and advisers who want to serve their clients effectively and identify opportunities within their practice.
For consumers, this typically involves engaging with a qualified financial adviser who can assess their specific situation and recommend appropriate products or solutions. The adviser's role is to ensure the consumer understands their options, the costs involved, and any risks associated with their decision.
Why It Matters for Advisers
For financial advisers and mortgage brokers, understanding this area creates opportunities to serve clients more comprehensively. Many consumers have needs across multiple product areas, and advisers who can address a broader range of requirements build stronger, longer-lasting client relationships.
If you're looking to expand your client base in this area, consider investing in specialist leads that connect you with consumers actively seeking this type of advice. For more information on lead types and pricing, visit our pricing page.
In practice: A property developer wants to build six flats on a plot of land in Manchester. The purchase price is £300,000 and the build cost is £700,000 over 12 months. A high-street bank declines because the borrower doesn't have 12 months of trading accounts for this specific project. A development finance lender lends £750,000 — 75% of gross development value — released in stages as the build progresses, charging 0.85% per month rolled up into the loan. The developer repays when units are sold.
Why it matters for brokers: Development finance is a specialist area with significantly higher fees than standard residential mortgages — procuration fees of 1-2% of loan value are common. Brokers who handle even one or two deals per year can add meaningful revenue, and developers tend to come back repeatedly for new projects. If you receive a development finance enquiry, the client usually has urgency and a clear need.